Last week at the D.C. Circuit was one of unanimous published opinions in four administrative law cases, which highlighted the principle that scientific determinations are due significant deference, the requirement that agencies reasonably explain the regulatory lines they draw, and the importance of addressing reliance interests when changing policy.

Novartis Pharmaceuticals Corp. v. Kennedy was a challenge to the FDA’s approval of an application to market a generic version of a heart-failure drug. The brand name manufacturer sued the FDA, arguing that the application did not meet the requirements for an abbreviated new drug application (ANDA). One requirement is that the new drug has the same “active ingredients” as the approved drug. The generic manufacturer’s ANDA carved out uses from the label that were protected by a live patent. According to the brand name manufacturer, the FDA should not have approved the ANDA because it would result in a less safe version of the drug and require adding to the existing label. Writing for the unanimous panel, Judge Katsas concluded that the FDA did not act arbitrarily and capriciously. Though the “label add[ed] four words,” it did so “to eliminate the patent-protected use of the drug,” and “that is how this scheme is supposed to work.” And the FDA reasonably concluded “that drugs can have the same active ingredients even if they have different solid-state physical forms or crystal structures,” which was the case here.

In World Shipping Council v. FMC, the D.C. Circuit reviewed a Federal Maritime Commission rule about demurrage and detention fees for delays in shipping. Ocean carriers and marine terminal operators charge these fees to truckers and others in the supply chain for delays. The FMC promulgated a rule limiting which parties can be subject to these fees. Writing for a unanimous panel, Chief Judge Srinivasan found a classic instance of arbitrary and capricious line-drawing by an agency: “While the Commission’s basic, stated rationale was to confine the parties against whom demurrage and detention charges may be levied to entities who are in a contractual relationship with the billing party, the Commission, without adequate explanation, left out entities who are in such a contractual relationship while seemingly including others who are not.” The proper remedy was severance of the challenged part of the regulation because the rest of the regulation could function independently and the FMC would have adopted the remaining provisions even without the problematic part.

In re: Sealed Case, an appeal from the United States Tax Court, involved a whistleblower claim involving Wall Street firms that helped taxpayers unlawfully avoid tax liability. The whistleblower was entitled to a percentage of the IRS’s recovery from the firms. Writing for a unanimous panel, Judge Garcia concluded that the IRS’s Whistleblower Office did not have sufficient evidence to support its decision to award the whistleblower only 22% of one of the awards, rather than the maximum of 30%. The Office clearly erred in concluding that the IRS’s field team discovered the problem on its own because the “record contain[ed] no indication” that they did so.

Capital Power Corp. v. FERC was about real power and reactive power. Real power lights up your house. Reactive power maintains stability on the electric grid, which we need for the transmission of real power. The Midcontinent Independent System Operator (MISO) treated real power and reactive power as distinct services until 2022. It was then that FERC approved an amendment to MISO’s tariff, which had the result of cutting off cost-based compensation to generators for reactive power. Writing for the unanimous panel, Judge Katsas held that FERC “failed to fully consider the generators’ short-term reliance interests” when it approved giving the tariff amendments immediate effect. In particular, FERC did not explain why the generators’ debt and contractual obligations, which they incurred in reliance on the past practice, “were unjustified, entitled to no weight, or outweighed by other considerations.”

The remaining cases from last week were Marseille-Kliniken AG v. Republic of Equatorial Guinea, which held that a district court did not have to defer to the arbitrators’ construction of a dispute-resolution clause in a contract between the Republic of Equatorial Guinea and a Swiss company; Estate of Jeremy Isadore Levin v. Wells Fargo Bank, N.A., which held that the district court erred in quashing an attachment of funds to satisfy a judgment against the Islamic Republic of Iran; and United States ex rel. O’Connor v. U.S. Cellular Corp., which held that the False Claims Act’s public-disclosure bar did not apply because “the relators . . . materially added to the publicly available information and allegations” and qualified as original sources of the information.